Covid-19 Bounce Back loans for property businesses16:06 PM, 5th May 2020
About 4 weeks ago 47
As I mentioned previously, Polly Neate appeared about 5 and a half minutes into the Tonight programme last week called Britain’s Property Crisis. Click Here to view
Polly said “These so-called Section 21 evictions, or no-fault evictions, meaning no fault on behalf of the tenant, are actually the single biggest cause of homelessness in the country now.”
Oh dear Polly, there was so much wrong in such a short sound-bite.
Firstly, Section 21 is not so-called. Section 21 is the correct appellation.
Secondly, “so-called” should be applied to the description “no-fault”, because the latter has been twisted into implying that if S 21 was used the tenant cannot have been at fault, as you claimed in that sentence. S 21 was given that (unfortunately ambiguous) description because – unlike the alternative, Section 8 – there is no requirement to prove to a judge that there has been a breach of the tenancy agreement in the form of rent arrears or anti-social behaviour.
Thirdly, to say that S21 evictions are the single biggest cause of homelessness is muddle-headed. It is like saying that someone’s unemployment was caused by his dismissal.
If an employee is dismissed for theft, the cause of his unemployment is theft, not the dismissal letter. If a tenant is evicted for not paying the rent or for damaging the property or for anti-social behaviour, one of those is the cause, not the S 21 form.
Eviction is not the cause of homelessness, it is merely the process through which it sometimes occurs. The initial cause of homelessness, if it arises, is whatever triggered the eviction – which is predominantly the behaviour of the tenant.
Note the word sometimes. Eviction does not occur immediately, and homelessness is not automatic. Tenants are given a minimum of two months to find somewhere else to move to. If they cannot do so for some reason, then that reason is the cause of their ongoing homelessness, whether it be a poor credit history, insufficient income, lack of references or any other reason.
Landlords like nothing more than to have long-term tenants provided that they pay the rent and treat the property and the neighbours with respect, but when they stop doing so, landlords have to take action. They have a choice of two methods – Section 21 or Section 8. Note that eviction under S 21 cannot occur until the contractual rental period has finished.
Section 21 is chosen in preference to Section 8, because it costs much less in time and money and does not require a court case unless the tenant ignores it and fails to move out at the end of the two month notice period. Even then, it does not always require an appearance in court.
It is no surprise therefore that its use increased when benefits stopped covering the rent. This situation has got worse since 2015 because of George Osborne’s levy on finance costs.
The reason for the two month’s notice period is so that a landlord can terminate a commercial relationship that he or she is not happy with, and get the property back. Otherwise tenants would have tenancies for life, which is what caused a shortage of rental accommodation in the last century, together with Rent Control.
This is the sort of thing that happened when it was impossible to evict a tenant: “In my early days of property management which would be late 1960’s or early 1970s I worked for a property company that had a lot of secure tenanted houses, because of the then security of tenure and severe restrictions on rent, it was the policy to renovate and sell as soon as a tenanted house became vacant.” Click Here to see article and comment.
Sitting tenants reduce the sales value of a property considerably. So when one finally became vacant it was sold, reducing the supply.
It was Section 21 of the Housing Act 1988 that allowed an alternative to lifetime tenancies, and so gave landlords the confidence to increase the supply of rented accommodation, which had been shrinking for decades.
The fourth thing that is wrong in your brief sentence is the implication that if Section 21 did not exist, homelessness would be reduced. On the contrary, if S 21 did not exist, neither would a lot of the PRS. What would that do to the homelessness figures Polly?
Most landlords own only one or two properties. If they had no way of recovering them they would not rent them out in the first place, and the supply would shrink again. There would be less choice for tenants and rents would be higher.
Less choice and higher rents are what Generation Rent is campaigning for by attacking S 21.
I assumed that you realised their foolishness Polly, because Section 21 is not shown on your Campaigns web page – although the Welsh branch is campaigning against it.
You did not mention it in your essay for the RLA’s anniversary celebration either, although three other people did in theirs, thus displaying their ignorance of history and lack of common sense.
However, does your sentence on last week’s programme mean that you are thinking of jumping on the bandwagon to drive even more landlords (and tenants) out of the private rented sector?
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